EbonySun
Financial Plan
EbonySun will be a vast undertaking, requiring extensive start-up funding, but paying off handsomely within a short period.
The project funding is done by collecting $5.96 million dollars through equity financing from venture capitalists, private investors etc. The company owners will invest a portion of the money for initial startup. The company is managed by experienced professionals in the entertainment and casino industry.
Start-up Funding
The startup funding for EbonySun Entertainment Resort comes from investors and venture capitalists. The resort project requires a start-up investment of $5.96 million dollars.
| Start-up Funding | |
| Start-up Expenses to Fund | $5,250,000 |
| Start-up Assets to Fund | $2,710,000 |
| Total Funding Required | $7,960,000 |
| Assets | |
| Non-cash Assets from Start-up | $2,210,000 |
| Cash Requirements from Start-up | $500,000 |
| Additional Cash Raised | $0 |
| Cash Balance on Starting Date | $500,000 |
| Total Assets | $2,710,000 |
| Liabilities and Capital | |
| Liabilities | |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| Total Liabilities | $0 |
| Capital | |
| Planned Investment | |
| Owner | $2,000,000 |
| Investor | $5,960,000 |
| Additional Investment Requirement | $0 |
| Total Planned Investment | $7,960,000 |
| Loss at Start-up (Start-up Expenses) | ($5,250,000) |
| Total Capital | $2,710,000 |
| Total Capital and Liabilities | $2,710,000 |
| Total Funding | $7,960,000 |
Break-even Analysis
The Break-even analysis shows the number of units of sales required for the facility to make profit over the fixed costs.
| Break-even Analysis | |
| Monthly Units Break-even | 246,142 |
| Monthly Revenue Break-even | $2,911,155 |
| Assumptions: | |
| Average Per-Unit Revenue | $11.83 |
| Average Per-Unit Variable Cost | $1.66 |
| Estimated Monthly Fixed Cost | $2,501,750 |
Projected Profit and Loss
The following table and charts show the projected Profit and Loss for EbonySun. We expect to become profitable in the second year, as satisfied customers become repeat customers, and word-of-mouth about the resort spreads. We expect an increase in the tourist contingent, especially. As the Profit and Loss table shows, the company expects to see a steady growth in profitability over the next five years of operations.
| Pro Forma Profit and Loss | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | $35,159,544 | $39,058,876 | $44,977,008 | $53,338,312 | $66,469,488 |
| Direct Cost of Sales | $4,944,606 | $5,666,424 | $6,617,189 | $7,901,189 | $9,906,492 |
| Other Costs of Sales | $137,060 | $147,000 | $152,000 | $160,000 | $170,000 |
| Total Cost of Sales | $5,081,666 | $5,813,424 | $6,769,189 | $8,061,189 | $10,076,492 |
| Gross Margin | $30,077,878 | $33,245,452 | $38,207,819 | $45,277,123 | $56,392,996 |
| Gross Margin % | 85.55% | 85.12% | 84.95% | 84.89% | 84.84% |
| Expenses | |||||
| Payroll | $3,210,600 | $3,319,000 | $3,416,000 | $3,514,000 | $3,612,000 |
| Sales and Marketing | $1,040,000 | $1,100,000 | $1,200,000 | $1,300,000 | $1,400,000 |
| Depreciation | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 |
| Advertising | $8,800,000 | $9,000,000 | $10,000,000 | $11,000,000 | $12,000,000 |
| Professional-Fees | $3,210,600 | $3,310,600 | $3,410,600 | $3,510,600 | $3,610,600 |
| Office Supplies | $840,000 | $880,000 | $900,000 | $920,000 | $930,000 |
| Excise Taxes paid out | $9,643,296 | $10,843,296 | $11,843,296 | $12,843,296 | $12,843,296 |
| Utilities | $1,200,000 | $1,240,000 | $1,260,000 | $1,280,000 | $1,300,000 |
| Telephone | $960,000 | $950,000 | $960,000 | $968,000 | $978,000 |
| Insurance | $840,000 | $845,000 | $850,000 | $855,000 | $860,000 |
| Property Taxes | $96,000 | $101,000 | $107,000 | $111,000 | $115,000 |
| Web Development | $48,000 | $50,000 | $52,000 | $54,000 | $56,000 |
| House Keeping Supplies | $72,500 | $80,000 | $90,000 | $100,000 | $110,000 |
| Payroll Taxes | $0 | $0 | $0 | $0 | $0 |
| Total Operating Expenses | $30,020,996 | $31,778,896 | $34,148,896 | $36,515,896 | $37,874,896 |
| Profit Before Interest and Taxes | $56,882 | $1,466,556 | $4,058,923 | $8,761,227 | $18,518,100 |
| EBITDA | $116,882 | $1,526,556 | $4,118,923 | $8,821,227 | $18,578,100 |
| Interest Expense | $0 | $0 | $0 | $0 | $0 |
| Taxes Incurred | $17,065 | $439,967 | $1,217,677 | $2,628,368 | $5,555,430 |
| Net Profit | $39,817 | $1,026,589 | $2,841,246 | $6,132,859 | $12,962,670 |
| Net Profit/Sales | 0.11% | 2.63% | 6.32% | 11.50% | 19.50% |
Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company, as the business generates sufficient cash flow to support operations. The table also shows dividends paid out to all investors in later years; dividends will be distributed according to equity percent owned.
| Pro Forma Cash Flow | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | $35,159,544 | $39,058,876 | $44,977,008 | $53,338,312 | $66,469,488 |
| Subtotal Cash from Operations | $35,159,544 | $39,058,876 | $44,977,008 | $53,338,312 | $66,469,488 |
| Additional Cash Received | |||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 | $0 | $0 |
| Subtotal Cash Received | $35,159,544 | $39,058,876 | $44,977,008 | $53,338,312 | $66,469,488 |
| Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Expenditures from Operations | |||||
| Cash Spending | $3,210,600 | $3,319,000 | $3,416,000 | $3,514,000 | $3,612,000 |
| Bill Payments | $29,823,471 | $34,349,588 | $38,437,107 | $43,361,819 | $49,565,055 |
| Subtotal Spent on Operations | $33,034,071 | $37,668,588 | $41,853,107 | $46,875,819 | $53,177,055 |
| Additional Cash Spent | |||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| Dividends | $0 | $0 | $2,000,000 | $5,000,000 | $10,000,000 |
| Subtotal Cash Spent | $33,034,071 | $37,668,588 | $43,853,107 | $51,875,819 | $63,177,055 |
| Net Cash Flow | $2,125,473 | $1,390,288 | $1,123,901 | $1,462,493 | $3,292,433 |
| Cash Balance | $2,625,473 | $4,015,761 | $5,139,662 | $6,602,154 | $9,894,587 |
Projected Balance Sheet
The balance sheet shows healthy growth of net worth, and strong financial position. The net worth grows over the years as shown in the following table.
| Pro Forma Balance Sheet | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Current Assets | |||||
| Cash | $2,625,473 | $4,015,761 | $5,139,662 | $6,602,154 | $9,894,587 |
| Inventory | $391,812 | $541,134 | $643,957 | $786,195 | $1,035,061 |
| Other Current Assets | $200,000 | $200,000 | $200,000 | $200,000 | $200,000 |
| Total Current Assets | $3,217,285 | $4,756,895 | $5,983,619 | $7,588,349 | $11,129,648 |
| Long-term Assets | |||||
| Long-term Assets | $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 |
| Accumulated Depreciation | $60,000 | $120,000 | $180,000 | $240,000 | $300,000 |
| Total Long-term Assets | $1,940,000 | $1,880,000 | $1,820,000 | $1,760,000 | $1,700,000 |
| Total Assets | $5,157,285 | $6,636,895 | $7,803,619 | $9,348,349 | $12,829,648 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Current Liabilities | |||||
| Accounts Payable | $2,407,468 | $2,860,488 | $3,185,966 | $3,597,838 | $4,116,467 |
| Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $2,407,468 | $2,860,488 | $3,185,966 | $3,597,838 | $4,116,467 |
| Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $2,407,468 | $2,860,488 | $3,185,966 | $3,597,838 | $4,116,467 |
| Paid-in Capital | $7,960,000 | $7,960,000 | $7,960,000 | $7,960,000 | $7,960,000 |
| Retained Earnings | ($5,250,000) | ($5,210,183) | ($6,183,593) | ($8,342,347) | ($12,209,489) |
| Earnings | $39,817 | $1,026,589 | $2,841,246 | $6,132,859 | $12,962,670 |
| Total Capital | $2,749,817 | $3,776,407 | $4,617,653 | $5,750,511 | $8,713,181 |
| Total Liabilities and Capital | $5,157,285 | $6,636,895 | $7,803,619 | $9,348,349 | $12,829,648 |
| Net Worth | $2,749,817 | $3,776,407 | $4,617,653 | $5,750,511 | $8,713,181 |
Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5813.02, Night Clubs, are shown for comparison. We expect to maintain healthy ratios for profitability, risk, and return.
| Ratio Analysis | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
| Sales Growth | n.a. | 11.09% | 15.15% | 18.59% | 24.62% | 1.81% |
| Percent of Total Assets | ||||||
| Inventory | 7.60% | 8.15% | 8.25% | 8.41% | 8.07% | 3.76% |
| Other Current Assets | 3.88% | 3.01% | 2.56% | 2.14% | 1.56% | 45.60% |
| Total Current Assets | 62.38% | 71.67% | 76.68% | 81.17% | 86.75% | 53.77% |
| Long-term Assets | 37.62% | 28.33% | 23.32% | 18.83% | 13.25% | 46.23% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 46.68% | 43.10% | 40.83% | 38.49% | 32.09% | 17.55% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 27.98% |
| Total Liabilities | 46.68% | 43.10% | 40.83% | 38.49% | 32.09% | 45.53% |
| Net Worth | 53.32% | 56.90% | 59.17% | 61.51% | 67.91% | 54.47% |
| Percent of Sales | ||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 85.55% | 85.12% | 84.95% | 84.89% | 84.84% | 47.12% |
| Selling, General & Administrative Expenses | 85.43% | 82.49% | 78.63% | 73.39% | 65.34% | 27.00% |
| Advertising Expenses | 9.13% | 8.48% | 7.58% | 6.58% | 5.43% | 3.86% |
| Profit Before Interest and Taxes | 0.16% | 3.75% | 9.02% | 16.43% | 27.86% | 2.83% |
| Main Ratios | ||||||
| Current | 1.34 | 1.66 | 1.88 | 2.11 | 2.70 | 1.05 |
| Quick | 1.17 | 1.47 | 1.68 | 1.89 | 2.45 | 0.58 |
| Total Debt to Total Assets | 46.68% | 43.10% | 40.83% | 38.49% | 32.09% | 50.35% |
| Pre-tax Return on Net Worth | 2.07% | 38.83% | 87.90% | 152.36% | 212.53% | 4.76% |
| Pre-tax Return on Assets | 1.10% | 22.10% | 52.01% | 93.72% | 144.34% | 9.59% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Net Profit Margin | 0.11% | 2.63% | 6.32% | 11.50% | 19.50% | n.a |
| Return on Equity | 1.45% | 27.18% | 61.53% | 106.65% | 148.77% | n.a |
| Activity Ratios | ||||||
| Inventory Turnover | 12.00 | 12.15 | 11.17 | 11.05 | 10.88 | n.a |
| Accounts Payable Turnover | 13.39 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 28 | 28 | 28 | 28 | n.a |
| Total Asset Turnover | 6.82 | 5.89 | 5.76 | 5.71 | 5.18 | n.a |
| Debt Ratios | ||||||
| Debt to Net Worth | 0.88 | 0.76 | 0.69 | 0.63 | 0.47 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||||
| Net Working Capital | $809,817 | $1,896,407 | $2,797,653 | $3,990,511 | $7,013,181 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||||
| Assets to Sales | 0.15 | 0.17 | 0.17 | 0.18 | 0.19 | n.a |
| Current Debt/Total Assets | 47% | 43% | 41% | 38% | 32% | n.a |
| Acid Test | 1.17 | 1.47 | 1.68 | 1.89 | 2.45 | n.a |
| Sales/Net Worth | 12.79 | 10.34 | 9.74 | 9.28 | 7.63 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.70 | 0.82 | 0.77 | n.a |
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